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Chronic alcohol abuse, a major health problem, causes liver and pancreatic diseases and is known to impair hepatic alcohol dehydrogenase (ADH). Hepatic ADH-catalyzed oxidation of ethanol is a major pathway for the ethanol disposition in the body. Hepatic microsomal cytochrome P450 (CYP2E1), induced in chronic alcohol abuse, is also reported to oxidize ethanol. However, impaired hepatic ADH activity in a rat model is known to facilitate a nonoxidative metabolism resulting in formation of nonoxidative metabolites of ethanol such as fatty acid ethyl esters (FAEEs) via a nonoxidative pathway catalyzed by FAEE synthase. Therefore, the metabolic basis of ethanol-induced cytotoxicity was determined in HepG2 cells and recombinant HepG2 cells transfected with ADH (VA-13), CYP2E1 (E47) or ADH + CYP2E1 (VL-17A). Western blot analysis shows ADH deficiency in HepG2 and E47 cells, compared to ADH-overexpressed VA-13 and VL-17A cells. Attached HepG2 cells and the recombinant cells were incubated with ethanol, and nonoxidative metabolism of ethanol was determined by measuring the formation of FAEEs. Significantly higher levels of FAEEs were synthesized in HepG2 and E47 cells than in VA-13 and VL-17A cells at all concentrations of ethanol (100–800 mg%) incubated for 6 h (optimal time for the synthesis of FAEEs) in cell culture. These results suggest that ADH-catalyzed oxidative metabolism of ethanol is the major mechanism of its disposition, regardless of CYP2E1 overexpression. On the other hand, diminished ADH activity facilitates nonoxidative metabolism of ethanol to FAEEs as found in E47 cells, regardless of CYP2E1 overexpression. Therefore, CYP2E1-mediated oxidation of ethanol could be a minor mechanism of ethanol disposition. Further studies conducted only in HepG2 and VA-13 cells showed lower ethanol disposition and ATP concentration and higher accumulation of neutral lipids and cytotoxicity (apoptosis) in HepG2 cells than in VA-13 cells. The apoptosis observed in HepG2 vs. VA-13 cells incubated with ethanol appears to be mediated by release of mitochondrial cytochrome c via activation of caspase-9 and caspase-3. These results strongly support our hypothesis that diminished hepatic ADH activity facilitates nonoxidative metabolism of ethanol and the products of ethanol nonoxidative metabolism cause apoptosis in HepG2 cells via intrinsic pathway.